All trends remain Stable. The Bank's Long-Term Issuer Rating is composed of an Intrinsic Assessment of AA (low) and a Support Assessment (SA) of SA2, which reflects the expectation of timely systemic support from the
KEY RATING CONSIDERATIONS
The ratings and Stable trends reflect CIBC's diversified franchise, which ranks as the fifth-largest bank in
The ratings also consider that government support measures have largely mitigated the negative economic impacts of the Coronavirus Disease (COVID-19) pandemic. Positively, economic performance has rebounded, and the labour market is essentially at full capacity; however, headwinds persist from a potential aggressive interest rate tightening cycle to combat inflation, geopolitical tensions related to the
RATING DRIVERS
Over the longer term, DBRS Morningstar would upgrade the ratings if the Bank continues building the scale and diversity of its franchise, resulting in a sustained improvement in financial performance, without a commensurate increase in risk. Conversely, DBRS Morningstar would downgrade the ratings if there is a material deterioration in the Bank's asset quality, especially from deficiencies in risk management or if the Bank's level of profitability falls below the peer group.
RATING RATIONALE
Franchise Combined
CIBC enjoys a large presence in
Earnings Combined
CIBC generates strong earnings and profitability metrics, which are supported by its well-diversified franchise and contribute to the Bank's ability to absorb credit losses. CIBC reported Q2 2022 net income of
Risk Combined
Overall, DBRS Morningstar views CIBC's risk profile as conservative, reflecting a strong risk culture. CIBC's credit quality remains robust, with total PCL reaching
Funding and Liquidity Combined
CIBC has a strong funding and liquidity profile that benefits from substantial client-sourced deposits, which is supplemented through a wide range of wholesale funding sources. DBRS Morningstar views the Bank's usage of wholesale funding sources as being within an acceptable range, and remains in line with the Canadian bank peers. Over the last few years, CIBC has remained focused on raising additional deposit funding to help reduce its reliance on wholesale funding. Liquidity at CIBC remains strong, as it reported a Q2 2022 liquidity coverage ratio of 125% and a net stable funding ratio of 117%, both comfortably above the regulatory minimums.
Capitalization Combined
Capitalization remains strong at CIBC, reflecting significant levels of internal capital generation, which remains sufficient to support balance sheet and business growth initiatives. At period-end Q2 2022, CIBC's CET1 ratio was 11.7%. At this level, the Bank's CET1 ratio was well above the regulatory minimum of 10.5% for Domestic Systemically Important Banks (D-SIBs). In Q2 2022, CIBC's risk-based total loss-absorbing capacity ratio was at 30.8%, well above the regulatory threshold of 24.0%. The Bank reported a leverage ratio of 4.24% in Q2 2022 that was above the regulatory minimum of 3% and in line with its Canadian bank peers; however, DBRS Morningstar notes that this metric remains somewhat weaker than many global peers.
Further details on the Scorecard Indicators and
ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.
Notes:
All figures are in Canadian dollars unless otherwise noted.
The principal methodology is the Global Methodology for
The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrsmorningstar.com.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
This rating is endorsed by
Each of the principal methodologies/principal asset class methodologies employed in the analysis addressed one or more particular risks or aspects of the rating and were factored into the rating decision, Specifically, the Global Methodology for
The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar's outlooks and ratings are monitored.
For further information on DBRS Morningstar historical default rates published by the
Lead Analyst:
Rating Committee Chair:
Initial Rating Date:
For more information on this credit or on this industry, visit www.dbrsmorningstar.com.
Tel. +1 416 593-5577
Ratings
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
02-Jun-22 Long-Term Issuer Rating Confirmed AA Stb CA
U
E
02-Jun-22 Short-Term Issuer Rating Confirmed R-1 (high) Stb CA
U
E
02-Jun-22 Long-Term Deposits Confirmed AA Stb CA
U
E
02-Jun-22 Long-Term Senior Debt Confirmed AA Stb CA
U
E
02-Jun-22 Short-Term Instruments Confirmed R-1 (high) Stb CA
U
E
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
02-Jun-22 CIBC Tier 1 Notes Disc.-Repaid Discontinued -- CA
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
02-Jun-22 Long-Term Issuer Rating Confirmed AA Stb CA
U
E
02-Jun-22 Short-Term Issuer Rating Confirmed R-1 (high) Stb CA
U
E
02-Jun-22 Long-Term Deposits Confirmed AA Stb CA
U
E
02-Jun-22 Long-Term Senior Debt Confirmed AA Stb CA
U
E
02-Jun-22 Short-Term Instruments Confirmed R-1 (high) Stb CA
U
E
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
02-Jun-22 Long-Term Issuer Rating Confirmed AA Stb CA
U
E
02-Jun-22 Short-Term Issuer Rating Confirmed R-1 (high) Stb CA
U
E
02-Jun-22 Bail-inable Senior Debt Confirmed AA (low) Stb CA
U
E
02-Jun-22 Long-Term Deposits Confirmed AA Stb CA
U
E
02-Jun-22 Long-Term Senior Debt Confirmed AA Stb CA
U
E
02-Jun-22 Short-Term Instruments Confirmed R-1 (high) Stb CA
U
E
02-Jun-22 NVCC Subordinated Debt Confirmed A (low) Stb CA
U
E
02-Jun-22 Subordinated Debt Confirmed A (high) Stb CA
U
E
02-Jun-22 NVCC Preferred Shares Confirmed Pfd-2 Stb CA
U
E
02-Jun-22 Non-Cumulative Preferred Shares (Excluding Series 26, Series 27 and Series 29) Confirmed Pfd-2 (high) Stb CA
U
E
02-Jun-22 NVCC Additional Tier 1 (AT1) Limited Recourse Capital Notes Confirmed BBB (high) Stb CA
U
E
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